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Forensic Accounting

Business

Quiz 11 :

Fundamentals of Business Valuation

Quiz 11 :

Fundamentals of Business Valuation

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A calculation engagement is limited in scope to specific approaches and methods determined by agreement with the client.
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True False
Answer:

Answer:

True

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Which of the following is true of capitalization?
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Multiple Choice
Answer:

Answer:

C

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Egan, a forensic accountant, was appointed for a business valuation engagement by the management of Dreamsong, Inc. He qualified the purpose of the valuation, type of engagement, and the ownership interest to be considered. What should be Egan's next step?
Free
Multiple Choice
Answer:

Answer:

C

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The discount and capitalization rates are equal when the growth rate is positive.
True False
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A valuation performed in litigation must conform to the reporting provisions of professional standards.
True False
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In practice, absent valid market comps, forensic accountants most commonly use the dividend payout method.
True False
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Prospective data are more commonly used to value closely held companies.
True False
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Which of the following is situation commonly drives a business valuation engagement?
Multiple Choice
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Which of the following is a difference between a forecast and a projection?
Multiple Choice
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The management of Quills and Ink want to calculate the required rate of return (ROR) of the company. The following information is available: Risk free rate 5.30% Equity risk premium 4.24% Firm size premium 2.16% Industry risk premium 6.50% Specific company risk premium 3.00% Calculate the ROR of Quills and Ink.
Multiple Choice
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Which of the following is a primary issue of the business valuation theory?
Multiple Choice
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Lilac, Inc. uses a discount rate of 17.5% its expected long-term sustainable growth rate is 1.5%. The net cash flows from operations of the company for the previous years are provided below. img Calculate the value of business of Lilac, Inc.
Multiple Choice
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The NAV method determines a company's value as the difference between the book value of its assets and the fair market value of its liabilities.
True False
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The AICPA has more active credential holders (Certified Valuation Analysts) than all other valuation credentials combined.
True False
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A detailed report is a structured and comprehensive submission designed to provide the reader with a sufficient understanding of the data, reasoning, and analysis underlying the conclusion of value.
True False
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Which of the following is included in the first step of the valuation process?
Multiple Choice
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Which of the following premiums is generally calculated as the excess of stock market returns over government bond returns?
Multiple Choice
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Fair market value proposes an actual sale price for cash.
True False
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The book value of a business may or may not represent its fair market value.
True False
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Which of the following gives the calculation of the capitalization rate?
Multiple Choice
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